. Specifically, they characterize the optimal return on money in the presence of credit arrangements. There is a dual role for credit …: It allows buyers to trade without fiat money and also permits them to borrow against future income. However, not all … traders have access to credit. As a result, there is a social role for fiat money because it allows agents to self …

frictions giving rise to money as a medium of exchange are explicitly modeled. The framework is a three period OLG model where … production efficiency in the search market. In the absence of record-keeping, the government uses flat money as a substitute for … distortionary taxation of money may be needed as part of the optimal policy even if lump-sum taxes are available. …

Lagos and Wright (2005) demonstrate how the essential properties of a money-search model are preserved in an … markets under limited commitment and private information. The analysis demonstrates clearly how insurance, credit, and money … the Friedman rule. In particular, I find that the same frictions that render money essential may at the same time operate …

substantially changes the dynamics in the model, allowing agents to significantly smooth consumption and reduce the movements in …

taxation (consumption and estate taxes) with important welfare implications. We use three different altruistic approaches (warm …

behaves as a negative wealth effect and generates an immediate decline in output, investment, and hours worked. The large drop … in investment then causes a gradual but very persistent decline in the capital stock. That protracted decline in the …